Uncommon Wisdom

May 3 2011   12:53PM GMT

Microsoft financials: Servers and Office shine

Tom Nolle Tom Nolle Profile: Tom Nolle

Microsoft reported its numbers, and the results are interesting for what they say about the computer market overall. The entertainment side was very strong, thanks to Kinect, but Windows licenses were lower and this trend worried investors. In the middle, the server and Office franchises both delivered strong results. So what does this mean? Let’s discount Kinect; it’s early in the roll-out and competition is still sparse. We’ll instead focus on the rest.

PCs are not seeing the growth they once did, and that of course reduces the new-system licenses for Windows. Some of the slowing is due to tablet encroachment, but most is likely due to people just not upgrading as often. Windows 7 drove a spate of refreshes, but that’s over. I don’t think there’s much of significance in this particular data point.

What’s more interesting is that the server and Office portfolios did very well. The media has Linux running rampant in the data center, and cloud productivity tools kicking Office’s butt.

The truth is apparently not quite that dramatic. In fact, both Microsoft’s server sales and its Office sales were well ahead of IT spending trends overall. I’ve noted for quite some time that Google Docs isn’t equivalent to Office, and that’s for now enough to keep the Faithful in line, Office-wise.

I do have to admit surprise at the server numbers; 11% growth is twice the industry rate. I think a decent chunk of this is SMB spending; SMBs adopt Linux at half the rate of enterprises.

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